12:00 05Nov2007 RTRS-China cutting QDII funds' HK stock exposure-sources
By Victoria Bi and George Chen
SHANGHAI, Nov 5 (Reuters) - Beijing has told asset managers preparing to launch overseas stock investment funds to cut their exposure to Hong Kong because of fears that share prices in the territory may overheat, sources close to the matter said on Monday.
The China Securities Regulatory Commission (CSRC) has instructed several local fund houses to revise the structure of their overseas stock investment products and resubmit proposals with a lower exposure to Hong Kong stocks, they said on Monday.
Chinese fund houses and banks are jostling to launch overseas stock funds under the country's Qualified Domestic Institutional Investor (QDII) scheme, aimed at giving domestic residents more investment opportunities and promoting a better balance in China's international payments.
"Several QDII applicants have been told to change their products. This is apparently aimed at avoiding a shock to the Hong Kong stock market," a fund industry source familiar with the matter told Reuters on Monday.
